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4 Alta. L. Rev. 480 (1965-1966)
Tying Agreements - Against Public Policy - Petrofina (Great Britain), Ltd. v. Martin

handle is hein.journals/alblr4 and id is 488 raw text is: 480               ALBERTA LAW REVIEW

TYING AGREEMENTS-AGAINST PUBLIC POLICY-PETROFINA
(GREAT BRITAIN), LTD. v. MARTIN
The recent decision of England's Court of Appeal in Petrofina (Great
Britain), Ltd. v. Martin1 is concerned with what is undoubtedly one of
the most contradictory and conflicting areas of the common law, i.e. re-
straint of trade. The case specifically deals with the problem of how
far a manufacturer of a product can tie his distributors to dealing only
in his product and restrict them from handling those of his competitors.
In the present case, the manufacturer is an oil company, Petrofina (Great
Britain), Ltd., and the distributor is the local garage outlet. In England,
as in Canada, the major oil companies tie the garage outlet to them
through tying agreements which take a number of forms. The result,
however, is the same in all cases, i.e. the garage proprietor agrees to buy
his total requirements of motor fuels from a particular oil company,
thus rendering it impossible for him to sell petroleum products of other
oil companies. In England, these agreements are referred to as solus
agreements, and it is such an agreement which came before the courts
in the Petrofina case.
In Petrofina (Great Britain), Ltd. v. Martin,2 the defendant bought
the garage in question from vendors who had already tied the garage
to Petrofina and who were operating at a loss; Martin bought the garage
for £16,000 thus leaving the property free from any charge. The ven-
dors were bound under their own solus agreement to get Martin to
sign a new solus agreement on his own account with Petrofina, which he
did.
The principal terms of this agreement were as follows: Martin was
to buy exclusively from Petrofina all the petrol he required and was
not to sell motor fuel manufactured by any other company. He was to
sell this fuel at the retail price published by Petrofina' and was to pro-
mote the sale of Petrofina lubricating oils and greases and to advertise
on the premises only Petrofina's motor fuel. He could stock the oil of
other companies but was not to advertise it. Martin was to keep the
garage open at all reasonable times for the sale of petrol and oil, and
was to maintain an adequate stock. If Martin wanted to sell the garage,
he was to give Petrofina the first refusal, and if they did not wish to
buy he was not to sell unless he first got the prospective buyer to enter
into another solus agreement with Petrofina to carry out all of Martin's
obligations. Petrofina in return undertook to supply Martin with its
petroleum products, lubricating oils, and greases unless prevented by
causes outside its control, and to allow him a rebate of five pounds for
every 1,000 gallons of motor fuel purchased by him. The agreement
was to continue for twelve years from the time of purchase. If at the
end of this period Martin had sold 600,000 gallons of petrol, he could
determine the agreement thereafter by three month's notice; however,
he could not determine it until he had sold 600,000 gallons.
1 119661 1 All E. R. 126.
s This clause is now unenforceable due to the Resale Prices Act 1964, however most
dealers continue to sell at recommended prices.

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